• The International Monetary Fund (IMF) has issued a five-point plan to regulate the cryptosphere and provide a framework for exchanges and investors to work within.
• This includes licensing, registering, and authorizing crypto asset service providers, overseeing entities that carry out multiple functions, subjecting stablecoin issuers to prudential requirements, and establishing clear requirements for financial institutions dealing in cryptocurrencies.
• Lastly, a robust global crypto regulation and supervision framework is needed to adequately address the digital coins’ borderless nature.
The International Monetary Fund (IMF) has recently released a five-point plan to help regulate the cryptosphere, providing a framework for exchanges and investors to follow. The plan seeks to ensure that crypto asset service providers, such as those providing storage, transfer, exchange, settlement, and custody services, are licensed, registered, and authorized. The IMF also wants to ensure that any conflicts of interest are assessed by the responsible authority and prohibited if necessary. Transparent operations should be carried out to enable all dependencies and operations to be easily identified.
In addition, the IMF wants to ensure that stablecoin issuers are subject to strict prudential requirements as they are becoming a store of value for a greater number of investors. Without proper oversight and regulation, such holdings could destabilize monetary and financial stability, prompting the need for regulations on the scale of those employed in the banking sector.
Moreover, the IMF wants to ensure that established financial institutions dealing in cryptocurrencies are subject to clear requirements regarding the risks that arise from transacting in crypto. This is necessary to protect investors from potential fraud and other risks.
Lastly, the IMF recognizes the need for a robust, global crypto regulation and supervision framework as the digital coins’ borderless nature has highlighted the ineffectiveness of national authorities to adequately deal with them. A unified approach is necessary to address the issues in the cryptosphere, such as money laundering, terrorist financing, and other illicit activities.
The IMF’s five-point plan provides a blueprint for exchanges and investors to work within and helps ensure the stability of the cryptosphere. It is a step in the right direction towards the regulation of digital coins and provides a way for authorities to keep an eye on the ever-evolving industry.